Introduction

Since taking effect in January 2025, California Senate Bill 1103 has reshaped how landlords lease to small business and nonprofit tenants. The law was designed to protect “qualified commercial tenants,” including microenterprises, restaurants with fewer than ten employees, and nonprofits with fewer than twenty employees. In practice, it has increased administrative complexity and slowed leasing decisions across the state.

Implementation and Early Impact

Under the new framework, tenants must provide written self-attestations confirming whether they qualify for SB 1103 protection. Many landlords have added these attestations to lease intake forms or inserted representation clauses stating that the tenant is not qualified unless it provides written notice. According to practitioner commentary, large institutional landlords have adapted relatively quickly, while smaller owners and property managers have struggled with the paperwork and annual tracking requirements (JDSupra, California SB 1103: What Landlords Need to Know, 2025).

The extended rent increase notice rules have also had practical effects. Landlords must now give thirty days’ notice for increases of ten percent or less and ninety days for increases above ten percent within a twelve-month period. Short-term and month-to-month leases that once provided flexibility are now more difficult to manage. Retail center owners, for example, report having to plan rent adjustments months in advance to remain compliant (Carlton Fields, SB 1103: What California Landlords and Tenants Need to Know, 2025).

Translation requirements have created additional challenges. If a lease is negotiated primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, the landlord must deliver a complete written translation before execution. This rule has led to delays for multilingual negotiations and higher costs for certified translations, especially in Southern California markets with diverse tenant bases (Public Counsel, SB 1103 Implementation Alert, 2025). Failure to provide a proper translation can allow the tenant to rescind the lease.

Perhaps the most burdensome change has been the new standard for recovering building operating costs. Landlords may charge qualified tenants for expenses such as maintenance, property taxes, and utilities only if the costs are proportionally allocated, disclosed in advance, and supported by reasonable estimates. The law also requires landlords to provide documentation of those costs within thirty days only if the qualified tenant submits a written request. Many property managers have implemented standardized cost summary forms and notices informing tenants of their inspection rights, while others have opted to exclude small tenants from common-area maintenance charges altogether (Perkins Coie, New Statutory Requirements for Commercial Leases, 2025). Legal advisors caution that a landlord’s failure to follow these notice and documentation procedures could expose them to actual and treble damages under Civil Code Section 1950.9.

Conclusion

Six months into enforcement, SB 1103 has prompted landlords to re-evaluate how they handle smaller tenants. While no major lawsuits have yet tested the statute, compliance concerns have already influenced how leases are structured, notices are delivered, and costs are documented. Landlords who have updated their lease forms and implemented clear recordkeeping processes are finding the transition manageable. Those who have not may face greater exposure as tenant awareness of these protections grows.

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